Sunday, January 6, 2008
Book Review: The Complete Turtle Trader
For Christmas I received the book by Michael Covel titled "The Complete Turtle Trader." This is the true story of how Richard Dennis and William Eckhardt chose people through newspaper ads to teach their trading methods to and have trade on their account. Their was a bet between Dennis and Eckhardt about whether great traders are born or if they can be taught to trade great.
The book starts off talking about Richard Dennis and the beginnings of his trading career where he made millions of dollars from a small starting stake. He started his own company called C&D Commodities. Later in life, he made a bet with William Eckhardt about whether great traders were born or could be trained. Dennis believed you could train someone to be a great trader. They put an ad in the papers and interviewed and hired a group of diverse people to test their theory on. This group, known as the Turtles, were taught in a classroom setting for two weeks before set out to trade with Dennis' own account. The group became wildly successful as they all made amazingly large returns from the start. The group trades for Dennis' account for a few years before he puts an end to the project and send the Turtles out on their own. Some become majorly successful while others don't trade anymore.
The Turtles traded based on a trend following system. They looked for certain buy signals involved whatever they were trading breaking new highs or lows. They traded many different markets from stocks to oil to gold to cotton. The key is that they were looking for a market that set a new 4 or 11 week high or low. If a high was set they bought. If a low was set they sold short. The turtles had stops in place in order to not risk much of their capital. These stops were put into place based on that particular markets current volatility. Much of their success came about by strictly monitoring their risk. The turtles took a lot of small losses that were usually offset by the occasional huge gain. The occasional huge gains is where they made their money. Even though they were wrong more then they were right, the money they made on their right trades far exceeded the money they lost on their many wrong trades.
Would I recommend reading this book. Yes! I thoroughly enjoyed reading this book just for the story alone. There are some great tips to be learned from the book and you do get a good idea of the system the Turtles were taught to trade. However, the story of how these random people with completely different backgrounds were selected, taught and then set loose to make millions of dollars is very inspiring. Any aspiring trader should read this book.